Some years ago I leased a large property in South Africa. The lease was for twenty years, with five year breaks, with one years notice on either side to terminate. The Lessee had agreed to spend “x” amount on improvements, and had right of first refusal to buy. He also had to leave the property in exactly the state he found it.
The lease contract was drawn up by solicitors and worked well for quite a time. It is a sensible way to go when there are many unstable factors in a housing market, as you are not risking capital and the house is more your home than a rental, offering better long term security.
However, there were problems! Although, the lessee knew I would eventually sell when the time was right, his family had become extremely attached to the property. Showing a house to potential buyers with an uncooperative lessee does present a problem. Giving a lessee right of first refusal can deter buyers. Evidence of the condition or state of (dis)repair of property is also fraught with difficulty.
Having said that, I am surprised that this kind of arrangement isn’t more common, as it offers benefits to both parties. As long as a watertight agreement is drawn up, it would offer an alternative to buying or renting. I would certainly consider it, and would like to hear of any options available in soCal.
